The prospects of saving debt-ridden Swiber Group are "reasonable", but will hinge on support from stakeholders and the group's ability to complete some US$1.67 billion (S$2.3 billion) worth of secured projects, according to its interim judicial managers (IJMs).
Creditors of the oil services firm are willing to support the projects' completion, which could pave the way for its restructuring, the IJMs at KPMG said yesterday.
In July, Singapore-listed Swiber stunned the market with revelations of major financial woes stemming from a prolonged oil price rout, which has taken a heavy toll on the sector.
In a report filed in the High Court last Friday, KPMG said it has received 24 expressions of interest from global and regional investment firms to provide financing solutions or acquire certain Swiber assets. But the report did not identify any party. KPMG said it is "too early for interested parties to indicate a preferred transaction structure, or to provide specific details on terms and conditions".
The IJMs also identified US$284 million in working capital to be raised for the continued operation of Swiber and its unit, Swiber Offshore Construction (SOC). This comprises US$209.9 million from selling vessels and property; US$64 million receivables from arbitration proceedings and US$10.1 million from insurance claims to be pursued. Other potential sources include money owing from a key debtor and selling non-core assets.
Vallianz Holdings, which is 27 per cent-owned by Swiber, sought a trading halt before yesterday's market opening, pending an announcement. Vallianz, which provides support vessels, said last week several of its entities had got letters of demand from the IJMs for US$63.5 million. But Vallianz declined to pay.
SOC has a potential order book of US$608 million for projects for which it has submitted a bid. KPMG said SOC's leadership and key personnel are "intact" and could complete the projects if awarded.
The IJMs noted the continued operation of both firms may "prevent the potential crystallisation of contingent liabilities of about US$1.23 billion in a liquidation scenario".
As of July 31, Swiber Holdings had US$85.1 million in total assets and US$624.2 million in total liabilities, leaving it with net liabilities of US$539 million. This was due mainly to US$1.1 billion in impairment on investments in units and associates and other money owing. SOC had US$309.5 million in total assets and US$953.4 million in total liabilities, leaving net liabilities of US$644 million, due to US$230 million of money owing from related parties.
It warned that, in a liquidation scenario, unsecured creditors including bondholders could expect to recover only two cents on the dollar from Swiber, and four cents on the dollar from SOC. The Straits Times understands the recovery rate is expected to be higher under a JM, but this cannot be determined pending a restructuring plan.
At the same time, legal claims against Swiber Holdings and SOC are piling up. As of Aug 31, these totalled US$136.1 million. There were 17 letters of demand totalling US$36.1 million issued against Swiber Holdings. Claims against SOC totalled nearly US$100 million, including 87 letters of demand totalling US$81.7 million.